The $40 billion-plus diversified conglomerate Aditya Birla Group headed by Kumar Mangalam Birla has taken a major step forward in financial services with the license for its housing finance company coming through from the National Housing Bank (NHB).

The home finance foray is a major boost for the group which had drawn up big plans for a banking license but did not find itself in the list of two names cleared by the Reserve Bank of India (RBI) recently.

A spokesman for the Aditya Birla Financial Services Group (ABFSG) confirmed to Forbes India that the license from NHB had come in about a week ago and the group would now begin the execution of the business. The home finance business is expected to kick off operations in the third quarter of the current fiscal.

Sources said the home finance business was a perfect fit for the group and in keeping with its plans to grow its presence in the retail lending business. This will now allow ABFSG to offer home loans to its customers. ABFSG is already present across 500 cities in India and will initially offer its home loans in the top 30 cities.

ABFSG is currently present in various lines of business in the financial services space including life insurance, fund management, private equity, loans against property, SME loans, loans against shares, structured finance, general insurance broking, wealth management, stock broking and online money management.

The aggregate revenues of ABFSG as of March 31 2014 stood at Rs. 6,655 crore and its aggregate profit before tax was Rs 742 crore. ABFSG managed assets aggregating Rs 1,22,362 crore as of March 31.

Having gained healthy scale on the financial services business, the plan for the group now is to emerge as a one-stop for its customers' financing needs. "ABFSG intends to focus on product innovation and superior service to enhance its customer value proposition in this new segment," the spokesperson told Forbes India.

According to an ICRA study, the Indian mortgage market is currently dominated by big institutions like the State Bank Group, the HDFC Group, LIC Housing and ICICI Group which together accounted for 60 percent of the total market as at September 30, 2013. Recent reports have put the size of the Indian home finance market at Rs 9 lakh crore. But an NHB trend and progress report on housing in 2013 also shows that the penetration of housing is very low in India, with the housing to GDP ratio at just 9 percent, significantly lower than most emerging and advanced economies.

Though there is no independent confirmation of this, the Aditya Birla Group is also understood to be studying the recent draft norms for small banks and payment banks unveiled by RBI earlier this month very carefully. While a payment bank would be a good fit for the group too, given that it has telecom company Idea in its fold, a small, local feel bank is also something which can add heft to the financial services play of the group.

It is not yet clear how, if at all, the group will approach the two opportunities, though several players who did not get banking licenses in the first round feel that they still may get an opportunity in future rounds if licenses are given 'on tap.'